According to two articles in Barron’s (May 25, 2019) – The Parent Trap (lead article)* and When To Bankroll Your Kids –by Sarah Max… the trend has become for parents to assist their adult kids with financial support – giving help to purchase homes; bankroll education; providing free room and board; vacations; and other big ticket items.
In some cases, this help is given at the detriment of parents’ retirement savings. “The biggest implication, no doubt, is when parents jeopardize their own financial security for the sake of their offspring”.
According to the article by Sarah Max – “U.S. Parents now spend $500 billion a year on their 18 to 34 year old children.”
Reshma Kapadia notes: “Parents have long tried to set their children up for success, but today that assistance is costing more, and lasting longer.”
Both articles are a must-read for parents who want to provide financial help, while at the same time managing their retirement goals wisely.
“It’s an old saw in the financial planning industry that you can borrow to pay for college, but not to fund your retirement.”*
*article The Parent Trap by Reshma Kapadia
UPDATE: Sept. 2020:
During the current economy with historically low interest rates, there is an opportunity to develop intra family loans at a very low interest rate. My website has articles about intra family loans (loans made between family members.)
During the COVID crisis, many parents are offering increased support to their adult offspring. An excellent article* offers solid advice as to why parents should keep their retirement savings in tact while at the same time offering their adult children some much needed help.
*How to support your adult children without breaking your nest egg by Michelle Fox, MFOX CNBC, June 8, 2020.
According to the article, "Many young adults are reeling from the economic fallout of the pandemic."
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